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Things to ponder:
Do you have enough life insurance to protect your family, should you die prematurely? This is extremely important because your small business will, more than likely, be worth nothing when you die. For example, the spouse of a deceased doctor or lawyer can only sell the tools of the trade, not the clients (the true bread and butter of any small service business). If you can predict when you might die, you could sell it ahead of time. But that's not very likely, so you and every small service business owner should make sure that you protect your family with at least seven times your gross income. So, if you make $100,000 per year then you should have over $700,000 in insurance.
Do you have a small business that your are setting up to have a family member run after you pass away? Well, be sure that they are capable, willing and licensed to do so.
What happens if you get ill or suffer an injury and can no longer run your small business? Do you have disability insurance? Disability insurance will generally pay about 60% of your income for a stated period of time. On top of that, your disability benefits could be non-taxable or taxable depending on whether you claimed the premium as a business expense.
More important...do you have "business overhead insurance"? Of course, even when you are out of commission, your small business still wants to cover expenses like salaries, insurance and utilities. Who will cover those costs? Your small business overhead expenses will not be covered by your disability insurance unless you include it as an add-on.
Do you have business partners? If so, do you have a "Buy and Sell Agreement"? Should your partner die, you will be protecting your interest in the business. Here's a great example of this: your partner dies and his wife wants to claim her share of the business. Is it in you best interest to have your deceased partner's family involved in the business? They may not know anything about how to run the business and cause huge headaches. This type of coverage would allow you to buy out your deceased partner's share of the business, avoiding any conflicts or interference by outside parties.
What about "disability buy-out coverage"? Do you have it? What would you do if a partner becomes severely disabled? Would you simply keep paying him or her even though you are doing all of the work... possibly for months or even years to come? You wouldn't have to worry about this situation if you have this type of insurance because your partner would be forced, based upon a previously signed and equitable agreement, to sell his portion of the company to you.
Of course, it's entirely possible that none of these problems may ever come up but it's your small business after all. The final step is to determine what sorts of insurance coverage you believe you want to protect your small business and then call and speak to a professtional who can set you up.
Category: InsuranceWhat 90% of All Small Business Owners Don't Know About Small Business Insurance! was written by:Author:Donna BrancheauAdded: Mon, 26 Feb 2007 23:41:33 -0500 This Article Has Been Read 101 times View all Donna Brancheau's articlesAbout the Author: Donna Brancheau has been teaching & tutoring in the San Diego area for 30 years. For insightful tutoring advice, visit her tutoring web site. Also, you can get unique copies of this article or other wonderful education articles to use on your web site! |
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